Vineyards and Wineries in Nebraska
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EXTENSION CENTER FOR COMMUNITY VITALITY Vineyards and Wineries in Nebraska A STATUS AND ECONOMIC CONTRIBUTION REPORT Authored by: Brigid Tuck, Extension Center for Community Vitality, and William Gartner, Department of Applied Economics IN PARTNERSHIP WITH: NORTHERN GRAPES PROJECT Vineyards and Wineries in Nebraska A STATUS AND ECONOMIC CONTRIBUTION REPORT October 2013 Authored by: Brigid Tuck and William Gartner Partners/Sponsors: Northern Grapes Project Special Thanks To: Nebraska Winery and Grape Growers Association Tim Martinson, Senior Extension Associate, Cornell University Chrislyn Patricka, Extension Support Specialist, Cornell University © 2013 Regents of the University of Minnesota. All rights reserved. University of Minnesota Extension is an equal opportunity educator and employer. In accordance with the Americans with Disabilities Act, this material is available in alternative formats upon request. Direct requests to the Extension Store at 800‐876‐8636. Printed on recycled and recyclable paper with at least 10 percent postconsumer waste material. VINEYARDS AND WINERIES: NEBRASKA i Table of Contents 1. NORTHERN GRAPES PROJECT 1 2. VINEYARDS AND WINERIES IN NEBRASKA: EXECUTIVE SUMMARY 2 3. SURVEY METHODOLOGY AND RESPONSE RATES 3 4. VINEYARD CHARACTERISTICS 5 Vineyard Operations 9 Marketing and Grape Utilization 12 Future Plans 14 Grape Varieties 16 5. WINERY CHARACTERISTICS 23 Grape Acquisition 27 Winery Sales and Production 29 Winery Marketing and Collaboration 33 Future Plans 37 6. ECONOMIC CONTRIBUTION OF VINEYARDS AND WINERIES IN NEBRASKA 40 Direct Effects 40 Indirect and Induced Effects 41 Total Economic Effects 41 Cold‐Hardy Related Economic Effects 42 7. SUMMARY AND CONCLUSIONS 43 8. APPENDIX ONE: PARTICIPATING INDUSTRY ASSOCIATIONS 44 9. APPENDIX TWO: COLD‐HARDY GRAPE DEFINITION 45 10. APPENDIX THREE: WINERY TOURIST AND EXPENDITURE CALCULATIONS 46 VINEYARDS AND WINERIES: NEBRASKA ii NORTHERN GRAPES PROJECT The emergence of cold hardy wine grape cultivars (primarily vitis riparia) in the 1990s created a new and rapidly expanding industry of small vineyard and winery enterprises in states across New England, northern New York, and the Upper Midwest. While the North American ancestry of these cultivars confers exceptional climatic adaptation and disease resistance, other challenges to production, processing, and marketing have slowed their successful commercialization in regional and national markets. Because their growth habit and fruit composition differ from traditional grape hybrids (i.e. vitis vinifera), new viticulture and enological practices are needed. Marketing tools are also required to educate consumers unfamiliar with the grapes and the wine styles they produce. Consequently, the long-term viability of these new businesses requires coordinated research and extension to optimize viticulture, enological (winemaking), business management, and marketing practices. To meet the needs articulated by industry stakeholders, the United States Department of Agriculture funded the Northern Grapes Project. The Northern Grapes Projects brings together researchers, Extension specialists, and industry professionals from 13 states to address viticulture, enological, business management, and marketing issues related to growing cold hardy grapes. After five years, the project teams intend to have accomplished the following goals: 1) production and sales of wines made from cold climate cultivars will have doubled, 2) improved quality resulting from better growing and winemaking practices will have improved customer retention and driven repeat sales, 3) enhanced breeding and cultivar evaluation will have resulted in an accelerated pace of cultivar release, 4) cold climate cultivars will establish unique regional marketing identities in their area, 5) wineries will have understood and applied business and tasting room management practices that drive sales and profitability, and 6) wineries and vineyards will have successfully transitioned from “startup” to “sustainably profitable.” To measure progress on these goals, one of the first tasks of the project team was to conduct a baseline survey. This survey, sent to grape growers and wineries in the participating states, gathered data on the current status of the grape and wine industry in general and on cold-hardy grape and wine production, specifically. Questions were asked pertaining to sales and production (wineries and vineyards), growing practices (vineyards), and operating practices (wineries). This document reports the results of the baseline survey for vineyards and wineries in Nebraska. It also quantifies the economic contribution of the industries. VINEYARDS AND WINERIES: NEBRASKA 1 VINEYARDS AND WINERIES IN NEBRASKA: EXECUTIVE SUMMARY In spring 2012, grape growers and winery owners in 13 states were surveyed under the Northern Grapes Project. Questions asked pertained to sales and production (wineries and vineyards), growing practices (vineyards), and operating practices (wineries). The goal was to establish industry baselines and quantify the economic contribution of the industries. This report presents the results for Nebraska. In 2011, the total economic contribution of the grape growing and winery industries in Nebraska was $27.3 million. This includes 1,060 jobs and $5.6 million in labor income. Indications are that the vineyard industry in Nebraska is maturing, especially when compared to the vineyard industry in other Northern Grapes Project states. The rate at which vineyards are being established is declining. The most rapid growth was from 2002 to 2007. The majority of vineyards do not have plans to expand in the near future. Vineyard operators in Nebraska are becoming increasingly sophisticated in their operations and marketing. The majority of vineyards are the primary agricultural operation for their owner. Vineyards in Nebraska rely relatively less on volunteer labor as compared to their counterparts in other states, choosing instead to use paid labor and owner-operator labor. Contracts with wineries are the primary method used to sell grapes. Vineyard operators’ main concerns in regards to the future growth and development of their vineyard relate primarily to labor. The cost of labor and availability of skilled labor are their primary concerns. This differs from most other participating states who report disease and pests/insects as their primary concerns. The Frontenac grape is the most commonly planted red cultivar and the Edelweiss grape is the most commonly planted white cultivar in Nebraska. The number of Marquette grape plantings is increasing, but not as rapidly as in other project states. Wineries in Nebraska continue to grow in number. Only 20 percent of existing wineries were operating prior to 2002. Over one-third of wineries have opened since 2007. Existing wineries are planning for moderate growth. A handful of wineries are looking at transitioning to new ownership, either by selling the winery or transferring the winery to a family member. Wineries report availability of skilled labor and government policies and regulations as the most significant challenges to their future growth and development. Wineries rely on their own wine branding initiatives and special events to drive sales. Attracting visitors to the winery is important strategy for wineries in Nebraska. Over half of a winery’s sales are through the tasting room. The overwhelming majority of wineries are located in rural areas, thus placing special emphasis on the need for wineries to be a tourism destination. VINEYARDS AND WINERIES: NEBRASKA 2 SURVEY METHODOLOGY AND RESPONSE RATES In early 2012, project researchers at the University of Minnesota sent a survey to grape growers and wineries in the participating states. Grower and winery lists were provided to the University of Minnesota by industry associations in each state (see appendix 1 for a list of participating associations). An email was sent to all members of these lists, resulting in 2,746 invitations to participate in the survey. Of these, 501 responded, for an overall response rate of 18 percent. In addition, links to the survey were available allowing individual growers and wineries not directly associated with an industry group, and thus not receiving a direct email invitation, to participate in the survey. These links were also announced during the Northern Grapes Project webinars. The survey links generated 110 responses. Therefore, in total, there were 611 total responses to the survey. Table 1-1 lists the participating states, the number of wineries and growers invited based on the industry association lists, the number of respondents using the open links, and the response rate. Minnesota has the highest membership totals.1 South Dakota had the highest response rate. The Nebraska Winery and Grape Growers Association provided e-mail addresses for its membership. In total, 172 invitations to participate in the survey were sent to potential Nebraska growers and wineries. Of those, 46 individuals responded, for a response rate of 27 percent. Table 1-1: Northern Grapes Project Baseline Study Participating States, Response Rates State Total Number of Contacts from Number of Response Rates Industry Associations Responses Connecticut 32 5 16% Illinois 272 52 19% Iowa 222 66 30% Massachusetts 28 10 36% Michigan 164 36 22% Minnesota 1,012 167 17% North Dakota 54 14 26% Nebraska 172 46 27% New Hampshire 51 14 27% New York 202 32 16% South Dakota 14 11 79% Vermont 47 18 38% Wisconsin 476 97 20% 1 Responses